Oil markets largely ignored U.S. President Donald Trump’s latest threat to impose hefty tariffs on buyers of Russian oil. The proposed 25% to 50% tariff could significantly disrupt global oil trade if enacted. However, analysts and traders remain skeptical, questioning whether this is another bluff. The repeated threats from the White House have begun to lose their impact, with many market participants showing signs of fatigue.
Despite Donald Trump’s warning, oil prices dipped on Monday. Brent crude futures for June fell by 0.2% to $72.59 per barrel, while U.S. West Texas Intermediate crude dropped 0.3% to $69.18. The muted response reflects growing doubts about the seriousness of the president’s proposal.
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China and India Hold Key to Any Sanctions Impact
China and India, two of the largest buyers of Russian crude, would play a crucial role in determining whether these potential tariffs would have any significant effect. Previous U.S. sanctions on Moscow have already made Chinese state-owned oil companies cautious. Sinopec and Zhenhua Oil halted purchases, while other firms scaled back their imports to assess compliance risks.
However, traders in China remain largely indifferent to Trump’s threats. Many have dismissed his comments as part of his ongoing brinkmanship. “We’re all numb now, oil prices are not responding,” said one Chinese oil trader. Another noted that Trump’s words have “lost credibility,” making it difficult to gauge any real impact unless concrete action follows.
Market Awaits Clearer Policy Signals
If the tariffs become a genuine possibility, the market will look at enforcement measures and whether OPEC increases production to offset any shortfall from Russian exports. Some analysts believe the recent secondary sanctions imposed on Venezuelan oil could serve as a model if the U.S. decides to target Russian crude more aggressively.
For now, Chinese buyers have paused purchases ahead of upcoming sanctions, which take effect on Wednesday. However, traders expect sales to resume as buyers find workarounds unless Beijing enforces a blanket ban. Until the U.S. clarifies its stance, oil markets will likely remain skeptical of Trump’s latest tariff threat.
